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Sunday, Jul 21, 2024

Recovery In Their Sites

Work at Kaiser Permanente’s new hospital in Kearny Mesa is going smoothly — so well that the expected completion of the $900 million project was moved up several months to March 2016. And that progress is reflected in the construction employment levels on the site.

Joe Stasney, Kaiser’s project director, said that while current daily staffing at the hospital construction site ranges from 130 to 180 workers, that number will grow next year during the peak times to 700 to 800 people, representing virtually every type of skilled trade.

“We just finished the foundation, and next week we’re starting steel erection,” Stasney said.

The hospital construction project, which is one of the largest in the county today, has lots of company with both commercial and residential buildings going up.

All the new building caused an uptick in construction hiring in San Diego for much of the past two years, according to data supplied by the state’s Employment Development Department. Over the 12 months ending in June, the region gained 5,200 construction jobs, bringing the total to about 66,600.

While it’s a far cry from the peak construction employment the region enjoyed in June 2006, when some 95,100 workers were engaged in various projects here, it’s much better than those dismal years from 2006 to 2011 when the county shed about 38,000 construction jobs after building of all kinds came nearly to a standstill.

The sector expansion is providing a nice jolt to the area’s economy as the wages paid in this sector are generally higher than region’s average wage, and spending by these workers supports jobs in other sectors, said Alan Gin, an economics professor at the University of San Diego. According to the U.S. Bureau of Labor Statistics, the average weekly wage for construction workers in San Diego last year was $1,121, compared with the weekly average for all workers of $1,107.

“The pay is not as good as it used to be, but it’s still better than a lot of other work,” Gin said.

Apartment Construction Surge

Construction is not only occurring at hospitals, libraries, schools and malls; it’s also happening in the residential sector, mainly in a surge of apartment building.

During the past two years, the number of multifamily construction permits issued in the county has more than doubled the number of residential permits. Last year, of the total 8,449 units issued, 69 percent were for apartments, according to county data.

“San Diego is issuing a large number of multifamily permits, and I don’t expect the number to be radically different for the future. I fully expect that multifamily will be the main gain,” said Borre Winckel, chief executive of the Building Industry Association of San Diego County.

Tom Wermers, CEO of the Wermers Cos., a San Diego apartment builder, said his company is busy all over Southern California, as it is for most of his fellow builders. In San Diego, the business has five apartment projects underway, ranging from about 50 units to several hundred.

In Riverside County, Wermers is halfway finished on a planned 868-unit apartment complex, and in Orange County, it’s building a luxury apartment project that has 256 units.

“The apartment business has really taken off,” Wermers said.

Based on an average 300-unit project, Wermers said it could employ about 200 to 300 workers, “and all the jobs pay well north of $20 an hour.”

While some said that building apartments doesn’t have the same job-generating impact as constructing single-family houses because multifamily projects require fewer workers per unit, Wermers refuted that. He said building apartments is more complicated and labor intensive than building a single-family abode.

Nonresidential Building Leading Way

Meanwhile, nonresidential construction in the county dwarfs that of residential in terms of the value of projects. The value of nonresidential building contracts awarded in the county this year through May was $1.9 billion, compared with $445 million for the total value of the area’s residential projects awarded in the first five months of the year, according to a report from McGraw Hill Construction.

Over the same five months last year, the value of nonresidential construction was $793 million, compared with $674 million for the residential construction here, McGraw Hill Construction said.

Nationally, it’s much the same story of growing construction jobs, with the industry adding about 6,000 jobs in June, bringing the total to more than 6 million. That is the highest total since June 2009 and a jump of 186,000 jobs, or 3.2 percent, since June 2013, according to a recent report from the Associated General Contractors of America.

But AGC officials warned those numbers could decline if cuts to federal transportation funding take effect in August.

“The construction industry continues to expand gradually and unevenly,” said Ken Simonson, AGC’s chief economist. “Despite recent job growth, construction employment is still more than 1.7 million jobs, or 22 percent, below its 2006 peak.”

Qualified Labor Harder to Find

In San Diego, the number of job openings is sometimes higher than the number of qualified applicants, Wermers said.

“There isn’t enough qualified labor in today’s market, and that’s causing price escalation,” he said. In particular, Wermers said there’s a lack of qualified drywall installers in this area.

Wermers speculated that as the recession that began in 2007 took hold and extended well beyond its official end in 2009, many construction workers moved away to find employment.

“And when they find work elsewhere, they generally don’t come back,” he said.


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